IC TIP UPDATES:
The board at Diageo (DGE) has approved the £2bn share buyback programme that was announced alongside the alcoholic beverage company’s full-year results in July. The first round will begin today and finish no later than 31 January 2019, buying back £1.4bn worth of shares. The remainder will be repurchased during the remaining time to 30 June 2019. All shares bought back will be cancelled. Shares were flat in early trading. Buy.
KEY STORIES:
Sports Direct (SPD) has agreed to buy House of Fraser for £90m after the chain appointed administrators this morning. Mike Ashley had been actively taking part in negotiations this week regarding the department store’s future, but it was reported yesterday that talks had broken down. House of Fraser is in dire straits after Chinese group C.banner – owner of toy store Hamleys – pulled out of plans to inject £70m following its own profit warning. It’s been a terrible year for the chain, which reported a disastrous Christmas trading period, forcing it to enter negotiations with landlords to reduce rent bills. It then entered a company voluntary arrangement (CVA) before announcing plans to close 31 of its 59 stores. An official statement from Sports Direct claimed House of Fraser’s last set of accounts (up to the year ended 31 January 2017) showed the group to have £943m in gross assets and a net profit of £14.7m.
OTHER COMPANY NEWS:
Vitec (VTC), which provides products and solutions to the broadcast and photographic markets, saw half-year revenues rise 11.2 per cent to £183m. Meanwhile, pre-tax profits were up 20.1 per cent to £19.7m. The top line was driven by higher revenue from the group’s acquisition of JOBY and Lowepro last year, and growth within its creative solutions segment prior to a fire disrupting its SmallHD business and with the benefit of the Winter Olympics. Management reiterated its full-year guidance, anticipating “material EPS growth”. It raised the dividend from 10.4p to 11.5p.
Trouble at Ryanair (RYA) continues. The budget airline has cancelled has cancelled around 400 flights affecting around 50,000 passengers due to walkouts from staff in Germany, Sweden, Ireland, Belgium, and the Netherlands. The pilots are striking over negotiations surrounding collective labour agreements. This is the same dispute that led to 300 flights to be cancelled last month after two-day walkouts from staff in Belgium, Portugal, and Spain. Shares fell 1 per cent in early trading.
Uranium storage vehicle Yellow Cake (YCA) has purchased another 350,000 pounds or physical uranium from Kazatomprom, for a total cost of $8.2m in cash. The latest deal brings the company’s value to 8.4m pounds of stockpiled material, which is stored at Cameco’s Blind River facility in Ontario. Investors appear to have cottoned on to the opportunity, with Yellow Cake’s shares now trading at just a 1.8 per cent discount to net asset value.
